Alienation of Land Act 68 of 1981: The glitches continue

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1 Alienation of Land Act 68 of 1981: The glitches continue DJ Lötz BIur LLB LLM LLD Professor of Law, University of Pretoria SC Gerber LLB LLM Postgraduate Student, University of Pretoria OPSOMMING Wet op Vervreemding van Grond 68 van 1981: Die haakplekke bestaan steeds Litigasie rondom die formaliteitsvoorskrifte kragtens die bepalings van artikel 2(1) van die Wet op Vervreemding van Grond 68 van 1981 blyk epidemies te wees. Gedurende die afgelope vier jaar is daar nie minder nie as negentien sake hieroor gerapporteer. Hierdie artikel is daarop gemik om die haakplekke, soos byvoorbeeld die omskrywing van die koopsaak en koopprys, skrifstelling en skriftelike volmaggewing te identifiseer en konsepoplossings aan die hand te doen oor hoe die aangeleentheid moontlik aangespreek kan word. Hiermee saam word daar ook kursories gekyk na die invloed van die Wet op Verbruikersbeskerming 68 van 2008 en die nuwe Maatskappywet 71 van 2008 op die bestaande formaliteitsvoorskrifte. Die werkswyse wat gevolg word, is om die betrokke sake waarop die probleem betrekking het, te ontleed en vandaar die voorgestelde submissies in perspektief te plaas. 1 BACKGROUND Section 2(1) of the Alienation of Land Act 1 was again the fly in the ointment in Lombaard v Droprop CC, 2 Lombaard v Droprop CC, 3 Du Plessis NO v Goldco Motor and Cycle Supplies (Pty) Ltd, 4 JR 209 Investments (Pty) Ltd v Pine Villa Country Estate (Pty) Ltd; Pine Villa Country Estate (Pty) Ltd v JR 209 Investments (Pty) Ltd, 5 Exdev v Pekudei Investments, 6 Chretien v Bell, 7 Janse van Rensburg v Koekemoer 8 and Northview Shopping Centre (Pty) Ltd v Revelas Properties Johannesburg CC. 9 It seems that the problems surrounding 1 Act 68 of 1981, hereafter the Act SA 150 (N) SA 1 (SCA) SA 617 (SCA) SA 302 (SCA) SA 282 (SCA) SA 54 (SCA) SA 118 (GSJ) SA 630 (SCA). 544

2 ALIENATION OF LAND ACT: THE GLITCHES CONTINUE 545 section 2(1) of the Act are epidemic. Over the last four years no less than nineteen cases dealing with section 2(1) of the Act were reported. 10 Problems relating to section 2(1) are, inter alia, the description of the res vendita and the purchase price, the writing provisions of section 2(1) and written authority required where a representative acts on behalf of the seller or purchaser. These problems, together with the influence of the Consumer Protection Act, 11 and Companies Act, 12 on section 2(1) of the Act, are investigated in this article. 2 DESCRIPTION OF RES VENDITA The description of the res vendita was recently contested in no less than six cases which are analysed below Lombaard v Droprop CC Facts In this case the applicant was the lessee of immovable property. In terms of the written lease agreement the applicant was entitled to an option to purchase the leased property, which was described as Certain portion 526 of Lot 432 (of the farm Melk Houte Kraal No 789). 15 The lease was signed by the applicant and third respondent on behalf of the first respondent, namely the close corporation. On exercising this option to purchase, the respondents alleged that the sale arising from the lease agreement was null and void for non-compliance with section 2(1) of the Act in so far as the description of the property in the lease agreement was imprecise and inadequate ( certain portion 526 compared to the title deed description being portion 526 ) and, secondly, by signing the lease agreement the third respondent was not authorised thereto in writing by the first respondent (the close corporation). Ndlovu J held that the crux of the dispute was the 10 See eg Engelbrecht v Merry Hill (Pty) Ltd SA 238 (E); Just Names Properties 11 CC v Fourie SA 1 (W); Manna v Lotter [2007] 3 All SA 50 (C); Reivelo Leppa Trust v Kritzinger [2007] 4 All SA 794 (SE); Thorpe v Trittenwein SA 172 (SCA); Balduzzi v Rajah [2008] 4 All SA 183 (W); Fairoaks Investment Holdings (Pty) Ltd v Olivier SA 302 (SCA); Fraser v Viljoen SA 106 (SCA); Just Names Properties 11 CC v Fourie SA 343 (SCA); Lancino Financial Investments (Pty) Ltd v Bennet [2008] 4 All SA 220 (SCA); Stalwo (Pty) Ltd v Wary Holdings (Pty) Ltd SA 654 (SCA); Waterval Joint Venture Property Co (Pty) Ltd v City of Johannesburg Metropolitan Municipality [2008] 2 All SA 700 (W). S 2(1) provides as follows: No alienation of land after the commencement of this section shall, subject to the provisions of section 28, be of any force or effect unless it is contained in a deed of alienation signed by the parties thereto or by their agents acting on their written authority of 2008 (hereafter Consumer Protection Act) of 2008 (hereafter new Companies Act). 13 Lombaard v Droprop CC supra fn 2; Lombaard v Droprop CC supra fn 3; Du Plessis NO v Goldco Motor and Cycle Supplies (Pty) Ltd supra fn 4; JR 209 Investments (Pty) Ltd v Pine Villa Country Estate (Pty) Ltd; Pine Villa Country Estate (Pty) Ltd v JR 209 Investments (Pty) Ltd supra fn 5 and Exdev (Pty) Ltd v Pekudei Investments (Pty) Ltd supra fn Supra fn The title deed description, however, was Portion 526 (of 432) of the farm Melk Houte Kraal No 789.

3 (75) THRHR inclusion of the word certain in the property description in the lease agreement, contrary to the title deed description where the word certain is absent Judgment of the trial court The principle that an option to purchase constitutes a pactum de contrahendo, which has to comply with the formalities prescribed for the substantive contract envisaged by the parties, was reaffirmed by the court. 17 Hence, the option in casu had to comply with section 2(1) of the Act, which requires a deed of alienation to be in writing and signed by the parties thereto or by their agents acting on their written authority. 18 The court further held that a deficient description of the res vendita will result in nullity for non-compliance with section 2(1). 19 After a detailed semantic and case law 20 analysis of the term certain in the property description, Ndlovu J pointed out that the word certain may refer to something that is uncertain, unsure, indefinite or imprecise, depending on the context in which the word is used. 21 In determining such context, the surrounding circumstances, including the ex post facto conduct of the parties relating to the envisaged agreement, must be taken into consideration. The court held that the word certain in the description of the property in casu did create confusion and ambiguity as to the precise piece of land which forms the res vendita and that the intention of the parties was of no relevance for the purpose of compliance with section 2(1) of the Act. 22 Therefore the land sold could not be identified by reference to the contract per se without recourse to evidence from the contractual parties as to their negotiations and consensus, failing the test set in Clements v Simpson. 23 Ex post facto conduct considerations which the court took into account were the sublease of a portion of the property by the applicant to a third party and a second (conflicting) lease agreement which the first respondent concluded with another lessee over the same portion of the property under consideration. 24 Hence, the court concluded that the word certain could only mean that the property which was the subject-matter of the lease and sale was not the entire property as described in the title deed, but only a part thereof. 25 This was the reason, so the court held, why the word certain was included in the property description, deviating from the title deed description where the word certain was absent. 16 Para Para King v Potgieter SA 7 (T); Meyer v Kirner SA 90 (N); Johnston v Leal SA 927 (A); Van Leeuwen Pipe and Tube (Pty) Ltd v Mulroy SA 396 (D) and Hirschowitz v Moolman SA 739 (A); Krauze v Van Wyk SA 158 (A). 19 Supra fn 2 para 26. This is in accordance with Magwaza v Heenan SA 1019 (A) and Fraser v Viljoen supra fn Lugtenborg v Nichols 1936 TPD 76; Cromhout v Afrikaanse Handelaars and Agente (Edms) Bpk 1943 TPD 302; Blundell v Blom SA 627 (W); Van Niekerk v Smit SA 17 (T); Coopers and Lybrand v Bryant SA 761 (A). 21 Supra fn 2 para Para SA 1 (A); see also Headerman (Vryburg) (Pty) Ltd v Ping Bai SA 1004 (SCA); Vermeulen v Goose Valley Investments (Pty) Ltd SA 986 (SCA). 24 Supra fn 2 paras Para 41.

4 ALIENATION OF LAND ACT: THE GLITCHES CONTINUE 547 As a result, the res vendita was not clearly identifiable with reasonable certainty from the contract, disqualifying it from the requirements prescribed by section 2(1) and resulting in the contract being null and void Judgment of the Supreme Court of Appeal On appeal 26 it was held that the root of the problem regarding the property description hinged on the word certain. The Supreme Court of Appeal, contrary to the trial court, did not take Cromhout v Afrikaanse Handelaars en Agente (Edms) Bpk 27 and Lugtenborg v Nichols 28 into account, but relied on Van Niekerk v Smit 29 and Bundell v Blom, 30 where it was held 31 that the primary meaning of the word certain is something definite, something prescribed, something determined, fixed or settled. Navsa and Malan JJA held, with Heher, Shongwe and Mhlantla JJA concurring, that: The fact that the description of the property in the lease, and consequently the deed of alienation, does not correspond precisely with the title deed description is of no consequence, just as the omission of the extent of the property does not affect the matter. The property was thus sufficiently described to render the agreement of sale concluded when the option was exercised, at least on the face of it, valid. To hold otherwise would mean that the words of portion must be read into the description of the property sold before the figures 526. There is no compelling reason to do so. The description of the property is unambiguous and speaks for itself. Thus, in this specific regard, no evidence ought to be admitted to interpret the wording. 32 An important factor to be considered is that the res vendita was occupied by the purchaser as a tenant. Consequently the transaction might have qualified as a generic sale in which the res vendita was identified (individualised) on date of occupation. For this reason the res vendita was most probably certain and would fall within the requirements of section 2(1) of the Act. 33 Alternatively, the approach by Lewis JA in Du Plessis NO v Goldco Motor and Cycle Supplies (Pty) Ltd 34 might be appropriate in casu as far as the purchaser s occupancy as tenant was objective evidence to adduce identification of the res vendita. Hence, a meticulous description of the res vendita in the deed of alienation to identify it was in this instance pointless. This has long been settled law Compliance with the Subdivision of Agricultural Land Act One should also observe that the res vendita in Lombaard v Dropprop CC 35 involved the alienation of an undivided portion of agricultural land. A question thus to be answered is whether this agreement was not void from the start since it 26 Supra fn Supra fn Ibid. 29 Ibid. 30 Ibid. 31 Bundell v Blom fn Supra fn 3 para See Phone-A-Copy Worldwide (Pty) Ltd v Orkin SA 722 (A) and Pienaar Phone- A-Copy Worldwide (Pty) Ltd v Orkin SA 729 (A) 1986 THRHR Supra fn 4. See discussion below. 35 Supra fn 2.

5 (75) THRHR did not comply with section 3(e)(i) of the Subdivision of Agricultural Land Act. 36 In the event of property being agricultural land, the Minister s consent is required in terms of section 3(e)(i) to sell a subdivision of such land. In Geue v Van Der Lith 37 the Supreme Court of Appeal ruled that an agreement which constituted a clear contravention of section 3(e)(i) is void ab initio, notwithstanding a suspensive or resolutive condition precedent to the Minister s consent. 2 2 Du Plessis NO v Goldco Motor and Cycle Supplies (Pty) Ltd Facts In this case the respondent leased a certain premises from the appellants trust. The key question was whether an option to purchase a future sectional title unit, contained in the said lease agreement, complied with section 2(1) of the Act. The terms of the option were briefly that it should be exercised by way of a written deed of sale to be drawn up by the appellants attorney, provided that the sectional title diagrams were approved and the sectional title register was opened. The time limit set for all this to happen, was twenty-four months from the conclusion of the lease. Notwithstanding the approval of the sectional title diagrams and various requests to the appellants attorney to draw up the deed of sale as envisaged in the option, enabling the respondent to exercise the option, the appellants failed to do so. The respondent successfully applied to the High Court for an order compelling the appellants to draw up the contract pursuant to the option. The trial court held that the appellants deliberately frustrated performance under the option and had to be compelled to perform by virtue of the doctrine of fictional fulfilment. An appeal was lodged against this decision, contending that the option did not comply with section 2(1) of the Act and was not exercised timeously in the prescribed manner Judgment Referring to Cairns (Pty) Ltd v Playdon 39 and The law of contract in South Africa 40 Lewis JA confirmed the trite principle that the essence of an option is to bind the option grantor not to revoke an offer and it is the option holder s choice whether to accept or reject such offer. 41 Hence the appellants were not entitled, without impunity, to revoke the offer stipulated in the option within the 24- month period. The written contract envisaged in the option was, according to the Supreme Court of Appeal, no more than a prescribed mode of acceptance. 42 If so, Lewis JA asked, what would the contents be of the contract envisaged by the parties? Usually the option per se reflects all material terms of the envisaged agreement. The Supreme Court of Appeal held that the option in casu, although of SA 333 (SCA). 38 Supra fn EDL Christie and Bradfield Christie s The law of contract in South Africa (2011) Supra fn 4 para Para 17. See Driftwood Properties (Pty) Ltd v Mclean SA 591 (A); Withok Small Farms (Pty) Ltd v Amber Sunrise Properties 5 (Pty) Ltd SA 504 (SCA) and Pillay v Shaik SA 74 (SCA).

6 ALIENATION OF LAND ACT: THE GLITCHES CONTINUE 549 very cursory, contained all the essential terms of a deed of sale, such as the res vendita and pretium. 43 It was further held that in these circumstances it was unnecessary to determine what the other additional terms, envisaged by the parties, might have been. 44 Be it as it may, the court held that the appellants were still bound by their undertaking to sell the premises to the respondent at the agreed price. 45 If the appellants deliberately frustrated the exercise of the option as per the prescribed mode it would not cause the option to fall away, but would result in the prescribed mode of acceptance to cease. Since the option embodied all essential terms of the contract of sale it had to be enforced on those terms. Lewis JA rejected the appellants contention that the res vendita (as premises in a building to be erected and pointed out by the seller to the purchaser) was unidentifiable without parol evidence. 46 The reason for this rejection was that, although section 2(1) of the Act requires the res vendita to be identifiable from the description in the contract itself, it has long been settled law that objective evidence may be adduced to identify the res vendita. According to Hirschowitz v Moolman, 47 these principles are also applicable to options. Lewis JA also employed Vermeulen v Goose Valley Investments (Pty) Ltd, 48 where Van Wyk v Rottcher s Saw Mills (Pty) Ltd 49 was quoted with approval, as authority to motivate her judgment that a statutory provision which compels a contract of sale to be in writing, cannot imply that only evidence by which the res vendita can be identified must be contained in writing. Since the respondent had in fact occupied the res vendita pursuant to the lease, clear and objective evidence was present to ascertain the res vendita precisely without resorting to the negotiations between the parties. Moreover, the res vendita was also contractually described as Shop 1 Prosperitas Building with reference to its street address. Thus, according to Lewis JA, there could be no uncertainty as to what the res vendita was. Unfortunately this approached was not followed in Lombaard v Droprop CC. 50 Griesel AJA, in a minority decision, disagreed with the above findings and held that for an option to be enforceable, it has to be constructed in such a manner that it reflects the substantive contract per se in such a manner that the mere acceptance of the option will constitute the envisaged agreement. 51 In order to comply with section 2(1) of the Act, Griesel AJA further held that a deed of sale of land, including an option, must not only contain all essentialia, but also all other material terms. 52 Although the option clause in casu contained all essentialia, it was uncertain what other material terms could be applicable. Griesel AJA 43 Supra fn 4 para 17. See Herselman v Orpen SA 1000 (SE) where the same approach was followed. 44 Supra fn 4 para Ibid. 46 Paras Supra fn 18. See also Lombaard v Droprop CC supra fn 2, Krauze v Van Wyk supra fn 18 and Van Rensburg Formaliteitsvoorskrifte, voorkoopsregte en opsies 1986 THRHR Supra fn SA 983 (A). 50 Supra fn Supra fn 4 para 34. See Brandt v Spies SA 14 (E), quoted with approval in Venter v Birchholtz SA 276 (A). 52 Supra fn 4 para 35.

7 (75) THRHR consequently reasoned that it was unnecessary for the court to speculate on what those other material terms might be and it was for the respondent to prove the contract which it sought to enforce. 53 Griesel AJA found that the respondent had failed to discharge that onus. Griesel AJA further held that the crux of the matter was whether the option clause embodied all material terms and not just the essentialia. 54 He reasoned that this was not the situation in casu. The option granted in the present case was, according to Griesel AJA, nothing more than an agreement to agree, which is insufficient to serve as a basis for a binding agreement of sale or option. 55 In conclusion he held that without a complete offer it was impossible to have a valid contract of sale complying with section 2(1) of the Act. 56 For this reason the option in question was unenforceable. With reference to Soteriou v Retco Poyntons (Pty) Ltd, 57 where it was held that the court was neither the destroyer nor the creator of contracts, Griesel AJA was convinced that both the trial court and Lewis JA in the majority decision erred in their attempts to create an agreement of some sort on behalf of the parties. 58 Since the appellants did not contend that there were any other terms over and above those contained in the option, Navsa JA, in a separate judgment, disagreed with the above conclusion of Griesel AJA. 59 Navsa JA also held that the option was similar to and compatible with that in Driftwood Properties (Pty) Ltd v Mclean 60 and was therefore correctly enforced by the Supreme Court of Appeal. 61 Thus, according to Navsa JA, Lewis JA in the majority judgment appropriately relied on the correct authority and he agreed with her that the property description complied with section 2(1) of the Act. 62 Navsa JA further argued that Griesel AJA was not entitled to take the background circumstances into account when he interpreted the option. Consequently the option was clear, unambiguous and correctly interpreted by Lewis JA. 2 3 JR 209 Investments (Pty) Ltd v Pine Villa Country Estate (Pty) Ltd; Pine 63 Villa Country Estate (Pty) Ltd v JR 209 Investments (Pty) Ltd Facts The facts of this case can briefly be summarised as follows. Pine Villa Estates (Pty) Ltd sold a certain portion 7 of the farm Swartkop 383 JR 64 to JR 209 Investments (Pty) Ltd to be developed by M and T Development (Pty) Ltd into a proposed township known as Monavoni Extension 18. The proposed township 53 Para Para Para 39. Cf Letaba Sawmills (Edms) Bpk v Majovi (Edms) Bpk SA 768 (A); Namibian Minerals Corporation Ltd v Benguela Concessions Ltd SA 548 (A); Premier, Free State v Firechem Free State (Pty) Ltd SA 413 (SCA). 56 Supra fn 4 para SA 922 (A). 58 Supra fn 4 paras Para Supra fn Supra fn 4 para Paras Supra fn Hereafter Portion 7.

8 ALIENATION OF LAND ACT: THE GLITCHES CONTINUE 551 consisted of a number of properties including Portion 7. The sole shareholder and director of Pine Villa Estates (Pty) Ltd was one Oberem. Clause 11.2 of the agreement provided as follows: Both parties take note that a portion of this property between 5 000m² and 5 653m² in extent and including the residential house on this property is to be transferred into the name of... Oberem... as soon as sub-divisional diagrams are available to effect this transfer. The Purchaser shall be liable for all costs relating to this subdivision and hereby guarantees that these diagrams will be available not later than 7 (seven) months after date of this agreement. The Seller shall be liable for all costs regarding the transfer of this property into the name of... Oberem. 65 Portion 7 was transferred to the purchaser against full payment of the purchase price. However, the purchaser was unable to make available the diagrams referred to in clause 11.2 within the agreed period. As a result the 11.2 Property was not transferred into the name of Oberem. Because of this breach and the purchaser s failure to rectify same within the contractually agreed period, the seller alleged that the agreement was cancelled and claimed retransfer of Portion 7, alternatively, payment of damages being the difference between the present market value and the purchase price of Portion 7. Relying on Parsons v MCP Bekker Trust (Edms) Bpk, 66 the seller argued that although Portion 7 had been adequately identified, the area to be excluded and retransferred to Oberem in terms of clause 11.2 (the 11.2 Portion) had not. Therefore, the agreement was null and void ab initio for non-compliance with section 2(1) inasmuch as the latter piece of land could not be identified with reference to the provisions of the agreement alone Judgment The Supreme Court of Appeal held that the purchaser had complied with all obligations in terms of the agreement relating to Portion 7 and that section 2(1) of the Act was no longer relevant to the 11.2 Property. 67 These facts, so the court held, were in line with the judgment in Olifants Trust Co v Pattison. 68 In the latter case the court concluded that although the envisaged 10 acres to be transferred back to the seller could not have been clearly defined, such further agreement to achieve this did not infringe on section 1(1) of the General Law Amendment Act. 69 During the interdict procedure in the court a quo, Rabie J held that the description of the 11.2 Property, which could not be severed from the remaining part of the contract, was inadequate and did not comply with the requirements of section 2(1). Accordingly it was found that the contract was prima facie void for want of compliance with section 2(1). Botha J, on the other hand, during the amendment of pleading procedure in the court a quo, held that the property was adequately described. The fact that the shape and exact configuration of the 11.2 Property were left entirely to the purchaser s discretion depending on the layout of the township did not invalidate the 65 Hereafter the 11.2 Property SA 101 (T). 67 Supra fn 5 para SA 888 (W) of One of the forerunners of s 2(1) of the Act.

9 (75) THRHR agreement. Hence the contract was valid and in compliance with section 2(1) of the Act. With reference to Clements v Simpson 70 and Van Wyk v Rottcher s Saw Mills (Pty) Ltd 71 the Supreme Court of Appeal again confirmed that the test for compliance with the provisions of section 2(1) is whether the land alienated can be identified on the ground by reference to the provisions of the contract without recourse to evidence from the parties as to their negotiations and consensus. 72 A faultless description of the property, couched in meticulously accurate terms, is not required. 73 With Clements v Simpson 74 in mind, Harms ADP distinguished the present case from Parsons v MCP Bekker Trust (Edms) Bpk 75 and Botha v Niddrie 76 on which the seller relied. In Clements v Simpson, 77 as was the position in casu, a formula to determine the configuration (that is the area and location) of the res vendita was adequately addressed in the contract to satisfy the relevant statutory formality requirements. This vital aspect was absent in both the Botha 78 and MCP Bekker Trust 79 cases. For the res vendita to be described adequately in order to comply with statutory formalities, the contract has to contain an indication as to how the configuration of the res vendita was to be determined. If not, the agreement will be legally ineffective. In casu the court held that the formula in clause 11.2 to determine the shape and size of the erf was adequate and in compliance with section 2(1). 80 As a result, this ground of attack had no merit. Therefore, in the court a quo, Botha J correctly refused the amendment and Rabie J erred in finding that the seller had a right that could be protected by an interdict. It is clear that the Supreme Court of Appeal s approach is one of substance over form and it would rather be the exception than the rule that a deed of alienation would be deemed null and void because of technicalities. 81 However, it remains an open question whether this approach is conducive to the legislature s aims when it comes to formalities. It appears that the root of the principle that non-compliance with statutory formalities renders the alienation of land null and void, originated in Wilken v Kohler. 82 In this case a verbal agreement to purchase land was duly executed by payment of the purchase price against transfer of the property. The transaction 70 Supra fn Supra fn Supra fn 5 para Supra fn Supra fn Supra fn SA 446 (A). 77 Supra fn Supra fn Supra fn Supra fn 5 para See inter alia Herselman v Orpen supra fn 43; Chisnall and Chisnall v Sturgeon and Sturgeon SA 642 (W); Scheepers v Strydom SA 101 (A); Ten Brink v Motala SA 1011 (D); Lötz Ten Brink v Motala SA 1011 (D) koopkontrak van grond kontrakspartye en formaliteite waar n verteenwoordiger namens die koper optree 2002 De Jure 361) AD 135.

10 ALIENATION OF LAND ACT: THE GLITCHES CONTINUE 553 was later contested on the basis that the res vendita did not contain twelve morgen under cultivation, as represented by the seller, but seven. The trial court held that a provision of this nature might be waived and that non-compliance therewith rendered an agreement voidable at the option of either party. On appeal, Innes J touched on the possibility that a waiver of this nature could be tolerated if such statutory provision was for the benefit of an individual or a class and ruled that a right given on those lines to treat a contract as void might be exercised or not at the pleasure of the party concerned; the agreement would in effect be voidable at his option. However, Innes J held that contracts of land were often intricate and of substantial value and importance. Therefore the legislature, in order to prevent litigation, perjury and fraud, in this instance, intended the contact to be reduced to writing. Failure to do so would render the contract void and not voidable at the option of either party. Innes J motivated this viewpoint as follows: Whether, all things considered, such a provision is desirable, whether it does not create as great hardships as it prevents, is a matter upon which opinions may well differ; but I am satisfied that the provision was adopted not for the advantage of any particular class of persons, but on grounds of public policy. 83 Considering the meaning of the term void and the effect of public policy, Solomon J remarked as follows: [W]here the enactment has relation only to the benefit of particular persons, the word void would be understood as voidable only at the election of the persons for whose protection it was made, and who are capable of protecting themselves; but that, when it relates to persons not capable of protecting themselves, or it has some object of public policy in view which requires the strict construction, the word receives its natural full force and effect. 84 In conclusion Solomon J also held that public policy, in this instance, is directed at the prevention of lawsuits, fraud and perjury and that these objectives are an indicator to determine the contents and consequences of such legislation Exdev (Pty) Ltd v Pekudei Investments (Pty) Ltd Facts The gist of the dispute in this case was the purchase of a future office unit and an option to procure additional office space in the same prospective development. The res vendita of the future office unit was described along the lines of an existing res vendita bought from the respondent and transferred to the appellant, namely: [A]n office unit (at the same price for which sections 21, 22 and 23 were sold to you) of the same size and with a similar number of parking bays (8). 87 The res vendita in the option to purchase, on the other hand, was described as: [A] further 140 square metres at the market price prevailing when the new building is completed. 88 Both the sale of the future office unit and option were contained in the same document. 83 Supra fn (own emphasis). 84 Supra fn Supra fn Supra fn Para Ibid.

11 (75) THRHR Once the respondent claimed damages, founded on the appellants repudiation of the above sale and option, the appellants raised the validity of the contract as a defence. They argued that both the sale and option were part of a single unitary contract in which the res vendita and or purchase price were not adequately described. As a result, the deed of alienation failed to comply with the requirements set in section 2(1) of the Act, rendering it void. 89 Reasons put forward why the res vendita was inadequately described were, inter alia, the absence of a draft three-dimensional plan of the proposed development, leaving the selection of the shape, floor position, precise dimensions and architecture style of the unit in the sole discretion of the respondent. The respondent challenged this contention and maintained that the option was separate and divisible from the sale and that both the res vendita and purchase price were adequately described Judgment Leach JA explained that there is a distinction between the severance of a portion of a contract and the possibility that a contract may contain several distinct and separate agreements divisible from each other. 90 Relying on Middleton v Carr 91 and Nash v Golden Dumps (Pty) Ltd 92 the Supreme Court of Appeal held that the sale of the future office unit in casu created reciprocal rights and obligations which were entirely unrelated and separate from the option to purchase additional office space, which, on its own, also initiated a different independent set of rights and obligations. 93 It follows that, although the sale of the future office unit and option to purchase additional office space were incorporated in the same document, two separate and independent contracts were concluded. That being so, Leach JA held that it was pointless to consider whether the option to purchase additional office space was invalid in order to determine the validity of the sale of the future office unit. Thus, the only problem to solve was whether the sale of the future office unit was invalid due to the alleged vagueness of the description of the res vendita. Leach JA confirmed that the established test to verify whether the description of a res vendita is in compliance with section 2(1) of the Act is whether it can be identified from the contract itself, without resorting to evidence from the parties about their negotiations and consensus. 94 Moreover, the Supreme Court of Appeal yet again endorsed the well-known principle that section 2(1) of the Act does not require a faultless description of the property sold couched in meticulously accurate terms. 95 Leach JA furthermore highlighted the well-established notion to divide the possible property description, such as in the present situation, into two broad categories. First, those where the document itself sufficiently describes the res vendita to cause identification of it per se; second, those where 89 S 28(1). 90 Supra fn 6 para SA 374 (A) SA 1 (A). 93 Supra fn 6 paras Para Para 16. See Van Wyk v Rottcher s Saw Mills (Pty) Ltd supra fn , cited with approval, inter alia, in JR 209 Investments (Pty) Ltd v Pine Villa Country Estate (Pty) Ltd; Pine Villa Country Estate (Pty) Ltd v JR 209 Investments (Pty) Ltd 2009 supra fn 5.

12 ALIENATION OF LAND ACT: THE GLITCHES CONTINUE 555 it appears from the contract that the parties intended that either the buyer or the seller should choose the res vendita from a genus or class. Confirmation of the latter category can be found in Clements v Simpson 96 and JR 209 Investments 97 where it was held that the intention of the parties may be of such a nature that it is not necessary for the res vendita to be identified by reference to the exact description thereof in the deed of alienation, as long as it is identifiable after the seller (or purchaser) decided upon the lay-out and shape of the res vendita in conformity with their agreed specified requirements. It follows that the parties consensus will thus be complete and all that is still required for performance will be the intended physical and psychological unilateral act of the seller (or purchaser) individualising the res vendita. Leach JA concluded that the above principles effectively dispose of the appellants argument, since the size of the future office unit (260 m 2 ) and location of it (within the new building that the respondents were constructing) were determined. 98 All that was left open was the discretional and bona fide individualisation, in accordance with the parties contractual arrangement, of the res vendita by the seller. As a result, the consensus of the parties was complete and the appeal had to fail. The Supreme Court of Appeal also remarked in passing that the comments made by Lötz and Nagel 99 that section 2(1) of the Act has failed to achieve its objectives and is often abused by unscrupulous seller and purchasers to rescind for a deed of alienation, although somewhat unfair, is not without substance DESCIPTION OF THE PURCHASE PRICE The description of the purchase price was the bone of contention in Chretien v Bell Facts In this case the purchase price payment details were not specified in writing. The deed of alienation provided that no deposit or loan was required and that the full purchase price, including all other disbursements for which the purchaser was liable, should have been paid in cash before he was entitled to take transfer of the property. It was further agreed that the purchase price payment details would be agreed upon in writing not later than 30 April This never happened. 3 2 Judgment It was submitted that since the parties have stipulated that payment would be in cash the sellers could not, in the absence of any further agreement, have expected anything better than cash against transfer of the property into the purchaser s name. Tshiqi AJA recognised that this proposition echoes the common law 96 Supra fn Supra fn Supra fn 6 para Lötz and Nagel JR 209 Investments (Pty) Ltd v Pine Villa Country Estate (Pty) Ltd Case No 617/2007 (SCA) Pine Villa Country Estate (Pty) Ltd v JR 209 Investments (Pty) Ltd Case No 2/2008 (SCA) Section 2(1) of the Alienation of Land Act, description of res vendita 2010 De Jure 169 (hereafter Lötz and Nagel 2010 De Jure 169). 100 Supra fn 6 para Supra fn 7.

13 (75) THRHR position, but held that it was an express contractual term that the purchase price had to be paid before transfer and an agreement on the time of payment, which should not have been later than 30 April 2005, still had to be reached. 102 The Supreme Court of Appeal referred with approval to Dijkstra v Janowsky 103 where it was observed that the requirements in respect of a deed of alienation of land concerning section 2(1) of the Act could be recapped as follows: All material terms must be in writing; 104 a material term is not restricted to the essentialia of a contract; 105 the manner of payment is generally a material term; 106 there is no valid contract where a material term was left open for further negotiations and a final agreement thereon has not been reached; 107 and a court must be able to ascertain with reasonable certainty the terms of the contract. 108 The Supreme Court of Appeal concluded that the time of payment, as substantiated by the deed of alienation itself, was a material term of the agreement. 109 Consequently the deed of alienation did not comply with section 2(1) of the Act and was for this reason void. 110 In order to determine whether a term is material or not, the following questions, according to the test laid down in Herselman v Orpen 111 and Jones v Wykland Properties, 112 must be answered in the affirmative, namely, did the parties apply their minds to the term and did they agree, either expressly or impliedly, that the term should form part of their contract, and be binding on them? Terms that are naturalia do not have to be in writing. 113 It appears in the above matter that the reasoning of Binns-Ward J in Van der Merwe v Hydraberg Hydraulics CC and Van der Merwe v Bosman 114 again holds true where it was observed: When law and equity cannot concur, it is the law that must prevail... The formalities legislation, on which the result of these applications has ultimately turned, was evidently intended to promote certainty in regard to contracts in respect of the alienation of interests in land. The apparent legislative hope was that the imposition of formalities would lessen the scope for dispute and reduce the amount of litigation between parties to such contracts. Successive legislatures have persisted with the belief in that ideal, despite the observations by judges and academic writers over many years that the effect of the formalities has often been to bring about greater evils than those which it was hoped thereby to avoid. These evils include the resort by the dishonest and the unscrupulous to the formalities in order to avoid obligations seriously undertaken, which would otherwise be 102 Supra fn 7 para SA 560 (C). 104 Johnston v Leal SA 927 (A). 105 Ibid. 106 Patel v Adam SA 653 (A). 107 Jammine v Lowrie SA 430 (T). 108 Supra fn 7 paras 9 10; Burroughs Machines Ltd v Chenille Corporation of SA (Pty) Ltd SA 669 (W); Clements v Simpson supra fn Supra fn 7 paras 11 and Ibid. 111 Supra fn SA 355 (C). 113 Botha v Swanepoel SA 577 (T) SA 555 (WCC).

14 ALIENATION OF LAND ACT: THE GLITCHES CONTINUE 557 enforceable against them at common law, and a hampering of the ability of the courts to do justice WRITING PROVISIONS OF SECTION 2(1) OF THE ACT The writing provisions of section 2(1) of the Act were the stumbling block in Janse van Rensburg v Koekemoer 116 which is discussed below. 4 1 Should a habitatio be in writing? Facts The question to be answered in Janse van Rensburg v Koekemoer was whether an oral agreement (donation) granting a servitude of habitatio over immovable property infringes on the writing provisions of section 2(1) of the Act. In this case the applicants relied on an oral agreement (donation) to register a habitatio against the title deed of immovable property Judgment Since a habitatio results in a subtraction from the dominium, 117 Claassen J held, in accordance with the finding of the trial court, that a habitatio is a real right which can only be enforced against the grantor once it is registered against the title deed of the affected immovable property. 118 It follows that an agreement to initiate a habitatio, though inter partes binding on the contractual parties, does not by itself vest the legal title to the servitude in the beneficiary. For the latter to be achieved, registration of the servitude against the title deed is required. 119 This principle is analogous to the conclusion of a deed of sale of land, which only creates a personal right. It is the subsequent transfer of the property into the purchaser s name that will transform this personal contractual right into a real right of ownership. Claassen J concluded, which conclusion is fortified by Felix v Nortier NO 120 and Registrar of Deeds (Transvaal) v The Ferreira Deep Ltd 121 that any right resulting in the deprivation of an owner s dominium (title), such as a habitatio, usus, ususfructus or mineral rights, construed an interest in land as envisaged by the definition of land in section 1 of the Act. 122 For this reason any alienation, which includes a donation, 123 like the situation in casu, of an interest in land, which falls within the scope of the definition of land, has to comply with the writing and signature requirements of section 2(1) of the Act. The court further held that notwithstanding the fact that the donation of the habitatio did not comply with section 2(1) of the Act, it also disregarded section Supra fn 114 paras Also see Lötz and Nagel 2010 De Jure where this exact inadequacy of formalities legislation was amplified. 116 Supra fn See Cape Explosive Works Ltd v Denel (Pty) Ltd SA 569 (SCA) and Erlax Properties (Pty) Ltd v Registrar of Deeds SA 879 (A). 118 Supra fn 8 para See Willoughby s Consolidated Co Ltd v Copthall Stores Ltd 1918 AD [1996] 3 All SA 143 (SE) AD Supra paras See s 1 of the Act on the definition of alienation.

15 (75) THRHR of The General Law Amendment Act. 124 The latter Act requires a donation of future entitlements to be in writing. If not, such donation is void. The donation in casu did not meet this prerequisite and was also for this reason void. We agree with the above subtraction of dominium test to establish whether a deed of alienation of an interest in land should comply with section 2(1) of the Act. 5 WRITTEN AUTHORITY BY A CLOSE CORPORATION Written authority by a close corporation was the hub of the mess in Lombaard v Droprop CC 125 and Northview Shopping Centre (Pty) Ltd v Revelas Properties Johannesburg CC Lombaard v Droprop CC 127 One of the problems in this case was whether the third respondent 128 acted as the agent of the first respondent 129 and that a written authority to sign a deed of alienation was required in order to comply with section 2(1) of the Act. The trial court held that section 54 of the Close Corporations Act 130 is not wide enough to exempt close corporations or its members, when acting as agents on behalf of a close corporation, from compliance with the provisions of section 2(1) of the Act, namely, to have written authority. 131 Ndlovu J emphasised that contrary to the (now repealed) section 69(1)(a) of the Companies Act, 132 which explicitly exempts an agent acting on behalf of a company to have written authority, the Close Corporations Act does not have a similar provision. 133 It was common cause that the third respondent did not have written authority to sign a deed of alienation on behalf of the first respondent. The court held that the applicant s lack of knowledge of the absence of the third respondent s written authority was irrelevant since the written authority requirement in terms of section 2(1) of the Act is a strict requirement, denying a defence of absence of knowledge as envisaged by section 54 of the Close Corporations Act. 134 In conclusion the court held that a member who signed a deed of alienation of land as an agent on behalf of a close corporation in terms of section 54 needs to have written authority to act in that particular matter. 135 If not, such act will be unlawful and not within the scope of section 54 which only permits lawful acts. It follows, so the court held, that the deed of alienation will be null and void for of 1956; supra fn 8 para Supra fn Supra fn Supra fn A member of the close corporation. 129 The close corporation of Supra fn 2 para 55. In brief, s 54 stipulates that any member of a close corporation shall, in relation to any third party dealing with the corporation, be regarded as an agent of the corporation and any act of a member shall bind the corporation, unless the acting member has in fact no power to act and the third party with whom the member deals has, or ought reasonably to have, knowledge that the member has no such power of Supra fn 2 para Para Supra fn 2 para 57.

16 ALIENATION OF LAND ACT: THE GLITCHES CONTINUE 559 non-compliance with the aforementioned section 54 of the Close Corporations Act and section 2(1) of the Act. 136 Acting without written authority in these circumstances, so Ndlovu J reasoned, is equivalent to an illicit drug smuggling or diamond transaction concluded by a member on behalf of a close corporation. 137 It seems that the latter remark is not in line with the principles regulating legality as a prerequisite for the formation of a contract vis-à-vis formalities. Although in a different context, it was, notwithstanding a prerequisite to the contrary in terms of section 52 of the Close Corporations Act, held in Hanekom v Builders Market Klerksdorp (Pty) Ltd 138 that if a close corporation has only one member, written authority by the close corporation to conclude a deed of suretyship will not be required. 139 If written authority in these circumstances is compulsory, it will lead to an absurdity and nothing can possibly be achieved by requiring the sole member, before signing a suretyship on behalf of the close corporation, to give himself permission in writing to do so. 140 It is not farfetched to draw an analogy between this scenario and one where a sole member of a close corporation signed a deed of alienation of land on behalf of the close corporation without a written authority. In this instance the written authority would have been given by the sole member himself to himself to act on behalf of the close corporation. The object of section 2(1) of the Act should not be frustrated in these circumstances. 5 2 Northview Shopping Centre (Pty) Ltd v Revelas Properties Johannesburg CC Facts The requirement of written authority in terms of section 2(1) of the Act concerning an agent, functionary and member of a close corporation was the centre of the problem in Northview. Mr Christelis, the husband of the sole member of the first respondent, Revelas Properties Johannesburg CC, signed a deed of alienation on behalf of the close corporation without written authority. In defence to the appellant s claim for specific performance, the first respondent argued that the sale was invalid for want of formalities. The appellant, on the other hand, contended that written authority is not required when a close corporation is the principal. The issue therefore was whether Christelis, the second respondent, was duly authorised to sign the contract, as required by section 2(1) of the Act Judgment Brett AJ in the trial court held that if a person other than a member acted on behalf of a close corporation, that person would constitute an agent within the meaning of section 2(1) of the Act and would not qualify as its functionary. Thus, such agent may not conclude a deed of alienation of land on behalf of the close corporation unless authorised thereto in writing. The exception was also 136 Ibid. 137 Ibid SA 95 (SCA). 139 Para Ibid. 141 Supra fn 9.

17 (75) THRHR upheld on the basis that there was no allegation with specific reference to the written authority given to Christelis as well as the fact that if there was written authority it should have been attached to the particulars of claim. The provisions of section 2(1) of the Act originated from a Volksraad Besluit, 142 section 30 of the Transvaal Transfer Duty Proclamation, 143 section 49 of the Free State Ordinance, 144 section 1(1) of the General Law Amendment Act, 145 and section 1(1) of the Formalities in Respect of Contracts of Sale of Land Act. 146 Judgments dealing with the prerequisite of written authority where a party to a sale is a juristic person or a partner acting on behalf of a partnership date back to Potchefstroom Dairies and Industries Co Ltd v Standard Fresh Milk Supply Co 147 where the so called Potchefstroom Dairies principle was established and reaffirmed in Suid-Afrikaanse Sentrale Koöperatiewe Graanmaatskappy Beperk v Thanasaris, 148 Muller v Pienaar, 149 Trever Investments (Pty) Ltd v Friedhelm Investments (Pty) Ltd 150 and in the present case. 151 De Villiers JP held in the Potchefstroom Dairies case that the requirement of written authority does not apply where a partner signed on behalf of a partnership. 152 The reason for this ruling was that partners were more than agents and sustain the double character of agent and principal in one and the same transaction. Hence a partner is not an agent of the partnership within the meaning of section 30 of the Transvaal Transfer Duty Proclamation 153. Bristowe J in the same decision, however, expanded this no-written-authority requirement to other entities, such as companies, tutors, curators and corporations (co-operative societies). 154 The foundation for this expansion was that these entities cannot act unless it is through natural persons. Consequently, such entities are not in the position to authorise their representatives in writing and for this reason the written-authority requirement does not apply when a functionary of these entities signs a contract for the sale of land. Trusts, then again, are treated differently. In Thorpe v Trittenwein 155 it was held that trustees, unlike partners, are required to act jointly and it is therefore compulsory for a trustee to have the written authority of his or her co-trustees to sign a contract for the sale of land. This view, however, in our opinion, may be susceptible to the following criticism: of 12 August of of Supra fn of 1969; Lötz and Nagel 2010 De Jure TPD 506 (hereafter the Potchefstroom Diaries case) SA 314 (W) SA 195 (A) SA 7 (A). 151 Supra fn 9 paras Supra fn A forerunner of s 2(1) of the Act. 154 Supra fn SA 172 (SCA).